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Question(s) / Instruction(s):

A consultant has collected the following information regarding Young Publishing:

Total Assets $3,000 million
Tax Rate 40%
EBIT $800 million
Debt Ratio 0%
Interest Expense $0 million
WACC 10%
Net Income $480 million
M/B Ratio 1.00x
Share Price $32.00
EPS = DPS $3.20

The company has no growth opportunities (g = 0), so the company pays out all of its earnings as dividends (EPS = DPS). The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%. If the company makes this change, what would be the total market value (in millions) of the firm?

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